RetireJapan

TokyoWart wrote: ↑Tue Aug 11, 2020 11:04 am We established taxable accounts for our kids before the Junior NISA became available. I think you still need to be careful about the gift tax limit (no more than 1.1 million yen per year in total "gifts" of money) and our brokerage (Nomura) was very strict in confirming that my oldest son had full control over the account when he turned 20. The brokerage will have you fill out a form giving you custodial control over the account while they are minors but as soon as they turn 20 they (your kids) need to submit paperwork authorizing your access to the account or else you won't have any ability to ask questions about the account or make trades for them. In our case they even checked the handwriting on that paperwork to make sure it wasn't mine and called my son to confirm.

When you sign up for the J-NISA it is a package deal, so you are signing up for the taxable account at the same time.

I suppose the main advantage of investing in the taxable account is that your child will be taxed at a lower rate?

1. If I invest an amount in his taxable account to use for future school payments, is that money somehow officially earmarked?

2. Once the J-Nisa is retired, would it be best to invest directly in his taxable account up to 1.1 million, before investing in my own taxable account?

TokyoWart wrote: ↑Tue Aug 11, 2020 11:46 am

When you sign up for the J-NISA it is a package deal, so you are signing up for the taxable account at the same time.

It is now but we actually had to make an additional account application when the J-NISA came along. I think Nomura handles these (regular taxable and J-NISA) as separate accounts with one log-in because they appear differently in their system.

I suppose the main advantage of investing in the taxable account is that your child will be taxed at a lower rate?

These are "tokutei" accounts (特定口座) and they are all taxed at source at the same rates. My kids pay the same tax rate on dividends and capital gains as I do but I fortunately don't have to prepare Japanese tax returns for them because they only have the tokutei and J-NISA accounts.

1. If I invest an amount in his taxable account to use for future school payments, is that money somehow officially earmarked?

Not that I can tell. We haven't withdrawn enough money to know for sure but no one has ever asked (money withdrawn with either a cash card at 7&i bank ATM or by transfering to the linked bank account in the kids' name).

2. Once the J-Nisa is retired, would it be best to invest directly in his taxable account up to 1.1 million, before investing in my own taxable account?

I don't have any advice about this. Remember your kids can do whatever they want with that money when they turn 20 and at least so far I can't see any tax advantages in Japan for preferentially funding their accounts over yours. I guess if you are worried about estate tax limits this is a way to reduce the size of your estate.